"Craftsvilla's vision is to build a one-stop destination for consumers to buy everything ethnic. We believe that ethnic foods is as big a category as ethnic wear, with Rs 50,000 crore-plus market size and we are looking at ethnic foods as another frontier of growth in the ethnic space," said Manoj Gupta, co-founder and CEO, Craftsvilla, in a statement.

The valuation of the two companies at which the deal was struck was not disclosed.

Bangalore-based Arthazauca Ventures Pvt Ltd, which runs PlaceofOrigin.in, curates and on-boards producers of ethnic Indian foods and local specialities across the categories of sweets, snacks, staples and health foods. The company was founded by Ashish Nichani and Sudarsan Metla.

PlaceofOrigin.in was incubated at Axilor Ventures, a startup incubator launched by former Infosys CEOs Kris Gopalkrishnan and SD Shibulal along with Prof Tarun Khanna from Harvard and former Infosys director Srinath Batni.

Founded in 2011 by husband-wife team Manoj and Monica Gupta, Craftsvilla etails products across categories such as clothing, handicrafts, jewellery and art. It follows the business model of US-based Etsy, which created a successful P2P marketplace for handmade products.

In April 2015, Craftsvilla raised $18 million (around Rs 113 crore) from Sequoia Capital and others. Global Founders Capital, which is promoted by the Samwer brothers of Rocket Internet, participated in that round.

It also raised Rs 2.3 crore from Nexus and Lightspeed in an early-stage round of funding in 2011. In 2012, both the investors jointly invested around Rs 8 crore ($1.3 million) in the company's Series A round of funding.

Craftsvilla competes with NDTV's Indianroots, Cbazaar.com, IMBling, Indiabazaaronline, Indusdiva, Shopatplaces and Mirraw, among others. NDTV Ethnic Retail Ltd, a subsidiary of media group NDTV that runs ethnic wear-focused e-commerce venture Indianroots, raised $5 million in a Series A round of funding from Mumbai-based KJS Group last year. In 2014, Chennai-based Fashionista Retail Pvt Ltd, which runs Indian ethnic wear e-com site Cbazaar.com focused on the international market, secured an undisclosed amount in its Series B round of funding led by Indian private equity fund manager Forum Synergies. High City Retail Pvt Ltd, which runs Shopatplaces, raised an undisclosed amount of funding from Indian Angel Network last year.

The ethnic wear market is expected to grow at a CAGR of 8 per cent and reach $19,600 million in 2018, according to Technopak.